Tax-friendly Olympia voters defy expectations by rejecting initiative

Lost amid the stunning results of November’s presidential election was a smaller surprise on the homefront: For the first time in two decades, Olympia’s typically tax-friendly voters rejected a local tax proposal.

Known as Initiative 1, the proposal sought a 1.5 percent income tax — the state’s first — on all households within city limits with income that exceeds $200,000 a year. The money would have gone toward college tuition assistance for all public high school graduates in the city.

Despite the proposal’s appeal to progressive values, it wasn’t meant to be. Nearly 48 percent of Olympia voters (12,480) said yes, but about 52 percent (13,640) voted no.

Supporters and opponents had expected the initiative to pass, even in the face of an inevitable court challenge over its legality. Income taxes have been deemed unconstitutional in Washington state.

One reason it was expected to pass is Olympia voters’ history. Voters have consistently passed school district bonds and levies, as well as tax increases for public safety in 2012 and parks in 2015.

Olympia voters went against the statewide grain in 2010 with the failed Initiative 1098, which would have established the state’s first income tax on individuals earning more than $200,000 and married couples earning more than $400,000. Only 39 percent of voters approved it statewide, but more than 56 percent of Olympia voters said yes.

The last time Olympia voters rejected a tax proposal was in 1997, when a proposed bond measure to build a new Olympia library ended up failing on two ballots that year.

Money was another reason Initiative 1 seemed likely to pass. The Opportunity for Olympia campaign was spearheaded by the Economic Opportunity Institute of Seattle, which helped raise more than $239,000 for its campaign. Meanwhile, an opposition group headed by Olympia Mayor Cheryl Selby didn’t enter the fray until late in the election season and raised just $6,740.

Selby told The Olympian she was surprised but grateful that voters put “good governance over ideology” in voting down the initiative.

John Burbank, executive director of the Economic Opportunity Institute, said he was surprised by the election results. He acknowledged that the Olympia City Council’s attempt to keep Initiative 1 off the ballot, coupled with the opposition’s late rally, both played key roles in the outcome.

“The mayor’s opposition was consequential, and that was unfortunate. We had not anticipated that,” he told The Olympian. “If it had been a normal presidential election, I’m sure it would have prevailed.”

Burbank said it is up to the people of Olympia to decide whether to try another initiative. Had it passed, the initiative could have challenged Washington’s tax system — in which lower-income people pay a larger share of taxes than their wealthier counterparts because of the state’s reliance on sales tax — all the way to the state Supreme Court.

But some felt that income tax reform should be solved at the state level instead of using Olympia as a test case.

The initiative also called attention to the rising costs of higher education. Reports show that tuition has nearly doubled in the past decade for public schools of all sizes. Proponents argued that Initiative 1 would have met a significant need for a city where 41 percent of households either live below the poverty line or struggle to afford the basic costs of living.

“The problems don’t go away,” Burbank said. “But our legal arguments are strengthened in terms of the ability of the city to levy this type of taxation.”

The rejection of Initiative 1 could have more to do with Olympia voters’ savvy than partisan politics — considering that every precinct in Olympia chose Democrat Hillary Clinton for president.

Olympia is home to thousands of state government employees who likely had a better-than-average understanding of Initiative 1. Likewise, the Olympia City Council repeatedly challenged the initiative’s validity by calling attention to its loopholes and inconsistent legal language.

“There are a lot of people who are involved politically who did not think it would get past the courts and did not think the city should be spending money on this initiative, only to see it fail,” said Max Brown, a state employee and former Olympia Planning commissioner.

The results also could reflect voters’ feelings about whether they stood to benefit most from the college tuition assistance that was promised by the initiative.

In west Olympia, for example, nearly 75 percent of voters in the Goldcrest neighborhood’s precinct said no. Diana Alfonso, who serves on the board of directors, said most of the neighborhood’s 150 homes are owner-occupied. The average age of residents skews older, she said, but she would not describe the neighborhood as conservative.

“I think they felt that it might penalize the high earners,” Alfonso said of the initiative, speculating that its educational component may have turned off several voters. “You’re just asking other people to educate someone else’s child.”

Census data compiled between 2000-2013 shows that many of the areas that approved Initiative 1 have lower median household incomes compared with the northwest and southeast precincts where support was low.

The precinct with the highest approval rate for Initiative 1 is just north of Capital Mall, where nearly 72 percent of voters said yes. Much like downtown Olympia, that same area has a higher rate of renter-occupied housing and a lower median household income compared with Olympia’s largely residential southeastern and northwestern precincts.

In the Ward Lake area, for example, about 71 percent of voters rejected the initiative. The area includes Briggs Village on the west side and is bordered roughly by Yelm Highway to the south, North Street to the north and Boulevard Road to the east.

In another example, the precincts that include the Eastside and Bigelow neighborhoods approved Initiative 1 and have a median household income of about $46,000. To the south, the precincts consisting of Wildwood, Governor Stevens and South Capitol neighborhoods rejected Initiative 1 and have a median household income of about $75,000.

Larry Rus, board member of the Wilderness Property Owners Association, said his quiet southeast Olympia neighborhood has about 180 homes with a sizeable number of retirees, as well as apartment units and “a fair amount of renters.” Although he couldn’t gauge why 71 percent of voters in his area opposed Initiative 1, Rus pointed to a recent neighborhood issue as a possible clue.

“We talked about raising our dues,” he said, “and people weren’t too wild about that.”

Todd Newlean, president of the Lakemoor Community Club in the Ken Lake area, said many homeowners in his neighborhood have been living there for decades. The 41-year-old state employee counts himself among the younger residents in the neighborhood and is politically moderate. Only 31 percent of voters in the Ken Lake precinct approved Initiative 1.

“One of the things that certainly turned me off on this particular proposal was the groups from Seattle,” Newlean said of the initiative’s primary backers. “This should have been more of a grass-roots movement from our own city. It felt like a bigger group up there wanted to test the waters in Olympia.”

Olympia resident Ray Guerra, volunteer coordinator for the Initiative 1 campaign, said he visited nearly 2,000 homes in addition to collecting thousands of signatures in the city. He was surprised at the election outcome, especially when considering the left-leaning preferences of Olympia voters, and said the campaign underestimated the opposition.

“For every one person that was adamantly against it, I had three that were really supportive and excited about it,” Guerra said. “I thought we were going to take it easily.”

This story was originally published December 20, 2016 at 5:22 PM with the headline "Tax-friendly Olympia voters defy expectations by rejecting initiative."